Foreclosure easing in big cities but still spreading
NEW YORK (CNNMoney.com) -- Foreclosure filings declined in more than half of the country's worst-hit spots in the first three months of 2010. But that doesn't mean the healing has begun.
In a release issued Thursday, RealtyTrac, a leading online marketer of foreclosed homes, reported that foreclosure filings declined in 14 of the top 20 cities year-over-year, most of which are concentrated in the Sunbelt "bubble" states of California, Arizona, Florida and Nevada.
"The decreasing foreclosure activity in some of the nation's top foreclosure hot spots in the first quarter is not a sure signal that those areas are out of the woods yet," said RealtyTrac CEO James Saccacio.
Saccacio attributed much of the improvement to government-led foreclosure prevention programs, especially a new program encouraging banks to facilitate short sales. Those are transactions in which sellers, with lender approval, sell their homes to third parties for less than what they owe on the mortgage.
Banks have figured out that short sales are less costly to them than foreclosures because they save on a long list of expenses, including legal fees, taxes and maintenance, and brokers' commissions."Lenders take about twice the hit on a foreclosure as on a sort sale," said Rick Sharga, a RealtyTrac spokesman.
The Sin City news is a mixed bag: Filings are 13% worse than in the last three months of 2009, but 19% better than in the first three months of 2009.
The second hardest hit metro area was Modesto, Calif., with a rate of one filing for every 34 homes, down more than 13% year-over-year. Cape Coral, Fla., was third, with one in 35, down 26% year-over year. Tied for fourth at one for every 36 homes were Riverside, Calif., (down 19%) and Stockton, Calif., (down 25%).
Los Angeles, the nation's second largest metro area, recorded 59,293 filings during the quarter, more than any other metro area, but its rate of one for every 75 households made it only the 32nd hardest hit U.S. market.
Miami had the steepest year-over-year increase for any top 20 market. There were over 71% more filings during the first quarter of 2010 than it recorded during the same quarter in 2009.